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Tuesday 11 October 2011

Pension deficit

From Ian

I understand that Academies are forced to take on the pension deficit of non-teaching staff.  Are schools informed by the government of this potentially devastating financial implication?  Or are they too busy patting themselves on the back?

4 answers – add yours below

  1. alasdair smith said:

    Yes that is correct. There has been some uncertainty about this liability. I don’t know of any accurate information about the financial implications, but the unions such as UNISON,UNITE or GMB may know more. Interestingly we know that sections of the business community are keen to see teachers’ pensions cut because they believe it prohibits ‘for-profit’ providers entering the ‘market’.

    12 October 2011 at 3:11pm
  2. Christine, UNISON said:

    There is a DfE briefing note on the LGPS scheme on its website. It says that a school converting to an academy should contact their LGPS pensions authority at the earliest possible stage for an actuarial assessment of the employer contribution rate,for which there will be a charge.DfE says that schools may wish to have their own actuarial assessment (more money)and that contributions may be higher depending on the profile of the staff.It is hard to offer advice on this in as much as staff may have long service (higher cost) but be part-time and low-paid (lower cost). The inherited deficits which refer to stockmarket performance are usually to be repaid over 20 years but as share prices rise, the deficit falls. The academy will have to show the deficit on its balance sheet but will not be considered insolvent as the deficit is reduced by contributions.Academies are scheduled bodies (part of funding agreement) and cannot pull out of the scheme. Some may not have realised this particular transfer of risk in the mad rush for independence.

    24 October 2011 at 4:21pm
  3. K. GUERREIRO said:

    What advice regarding joining a the pension scheme should I give my son who has just started a part time support staff role at a comprehensive which is just becoming an academy? His contribution would be 6%, but I don’t know what the employer’s contribution would be or if he could transfer the pension if he moved somewhere else. His area is tennis coaching and extended school activities.

    25 October 2011 at 3:00pm
  4. David said:

    K Guerreiro – definitely your son should join the pension scheme. Despite the appalling changes that the government is proposing, these schemes are still a good investment for the future – with the employer contributing even more than the employee. Of course the governemnt will try to chnage this in future – but thie will be teh case wherever anyone works. The pension is currently fully transferrable as that is how the LGPS works.

    The overall issue – this has shown up a problem in the local authority schemes – they haven’t got the money to meet their obligations. This should be a real worry to all local government employees – get onto your unions to get the details for your area. As someone with a LGPS pension, I’d like to know why my own pewnsion entitlement hasn’t been looked after!! (and that’s NOT the academies fault for once)

    23 November 2011 at 11:11pm

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